Flips to the United StatesWhite Summers works with foreign-based companies that wish to "flip" to the United States and raise capital here.

Client Characteristics. The typical company looking for these services (the "Foreign Co") will look something like this:

Already formed under the laws of a foreign jurisdiction

Intellectual property (or at least some of the core IP necessary for the business of Foreign Co) has already been created and is owned by Foreign Co

May have already taken in some seed capital from investors (private or government) in its home country

Seeks to come to the US to raise capital and, potentially, to move some operations here as well

Is interested in forming a US corporation ("US Co"), usually in Delaware, to accomplish the above

Desires to set up Foreign Co as a wholly-owned subsidiary of US Co, such that the former equity holders of Foreign Co will exchange their interests for interests in US Co, and will become stockholders of US Co

Considerations for Flips. Companies contemplating a flip to the U.S. will need to consider and answer the following questions. White Summers frequently advises Foreign Co's on the preferable course of action with respect to these questions:

What is the purpose of US Co and what will be its relationship with Foreign Co?

Will there be profits or losses in the 1st year; if profits, will they be reinvested into US Co or paid as dividends to the stockholders?

Will the stockholders seek a liquidity exit for US Co (a sale or IPO) or will US Co add value to Foreign Co?

In which states does US Co plan to do business and what address and contact person (US representative) will US Co use for its operations?

Who will be the officers and directors of US Co?

How will the share exchange work; what class/series of shares of US Co will the interests of equity holders in Foreign Co be exchanged for?

How much capital will be invested into US Co, from whom and in what amounts?

Will there be a Stock Option Plan?

Will the Company seek venture funding, and if so, within what period of time?

Services Involved in a Flip. In connection with a flip to the United States, we normally undertake the following:

Effectuate a share exchange between the founders (and investors) of Foreign Co and US Co using a Share Exchange Agreement

Prepare agreement between Foreign Co and US Co, covering, for example, the following: (a) the capital infusion into US Co by Foreign Co, (b) which company owns the intellectual property, (c) which company owns new development, (d) where revenues are recognized, (e) service relationship between the companies, and (f) invoicing of customers

Put in place a US stock plan (which, depending on the laws of the foreign jurisdiction, can and often is used to compensate employees of Foreign Co, as well as employees of US Co)

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